Starr v. OneWest Bank
Filed 11/6/13 Starr v. OneWest Bank CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
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purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE
DISTRICT
DIVISION THREE
SANDRA STARR et al.,
Plaintiffs and
Appellants,
v.
ONEWEST BANK, FSB,
Defendant and
Respondent.
G047442
(Super. Ct.
No. 30-2010-00427977)
O P I N I O
N
Appeal from a judgment
of the Superior Court
of
County, Andrew P. Banks, Judge. Affirmed.
Sandra Starr and Richard
Starr, in pro. per., for Plaintiffs and Appellants.
Dykema Gossett, J. Kevin
Snyder and Brian H. Newman for Defendant and Respondent.
* * *
Plaintiffs Sandra Starr
and Richard Starr appeal from a judgment entered after the court sustained without
leave to amend the demurrer of defendant OneWest Bank, FSB to the second
amended complaint. Although the
allegations are framed in a variety of causes of action, the complaint
essentially asserts defendant improperly began and maintained non-judicial foreclosure
proceedings after plaintiffs defaulted on a note secured by a deed of trust on
their residence and failed to properly evaluate their request for refinance of
the loan.
On appeal they contend
the court erred in concluding their claims were primarily based on violation of
the Home Affordable Modification Program (HAMP
which does not allow a private right of action, and that instead each cause of
action states sufficient facts to constitute a claim. They primarily seek pain and suffering damages
due to the threat of losing their home. They
have not sufficiently pleaded any of the causes of action nor will they be able
to do so. Thus we affirm.
FACTS AND PROCEDURAL HISTORY
Plaintiffs purchased
their home in 2001 and refinanced it in 2006, executing a $345,000 note secured
by a deed of trust on that property. In
August 2008 they wrote to IndyMac Federal Bank, FSB (IndyMac FSB), which owned the
loan, seeking a loan modification. In
September 2008 plaintiffs stopped making payments. In December 2008 a notice of default was
recorded. A few months later defendant
began servicing the loan as a result of its purchase of the servicing rights when
the original servicer, IndyMac FSB, went into receivership.
In September 2009
plaintiffs contacted defendant and asked to be evaluated for a modification of
their loan under HAMP. A representative of
defendant verbally promised plaintiffs they would be considered for a
modification if they provided all necessary documents, i.e., the “Initial
Package.†By the end of March 2010 plaintiffs
supplied the Initial Package but defendant requested additional information and
claimed not to have received everything plaintiffs had supplied. Plaintiffs faxed all requested documents to
defendant several times over the next year and a half through November 2011. Plaintiffs also allege defendant denied their
request for a modification in March 2010 because they did not qualify for a
loan workout.
In June 2010 plaintiffs
were notified their request for a loan modification was being considered and
were apparently again asked to send the Initial Package. Plaintiffs submitted a complete Initial
Package by October but defendant repeatedly asked for the same information.
In November 2010, while
the application for the modification was still in process, plaintiffs, in
propria persona, filed their original complaint containing 18 causes of
action. When defendant filed a demurrer,
plaintiffs filed an amended complaint, adding eight more causes of action. The court sustained defendant’s demurrer to
the first amended complaint with leave to amend and plaintiffs retained an
attorney who filed the second amended complaint.
The second amended
complaint
lists 13 causes of action for negligence, intentional and negligent
misrepresentation, breach of oral contract and of the covenant of good faith
and fair dealing, promissory estoppel, intentional and negligent infliction of
emotional distress, unfair business practices (Bus. & Prof. Code, § 17200
et seq., UCL), unfair debt collection practices (Civ. Code, § 1788 et seq.)
slander of title, quiet title, and to cancel foreclosure documents and enjoin a
foreclosure sale. It alleges defendant
is jointly liable for all injuries and damages alleged.
In the general
allegations, plaintiffs plead the “action is to remedy a common[] plan or
scheme and pattern and practice to obtain title and possession of [p]laintiffs’
home . . . . [Defendant] (1) breached
its duties . . . and other express and[/]or implied promises made to
[p]laintiff[s] to consider and evaluate [p]laintiffs for a HAMP load
modification in good faith[;] (2) continued to threaten foreclosure during
[p]laintiffs’ HAMP evaluation; and (3) failed to comply with HAMP duties and
standards precluding [sic] [p]laintiffs
a good faith evaluation under HAMP.†Defendant
“acted without proper authority under California
law†(underscoring omitted) and failed to comply with the terms of the trust
deed.
Plaintiffs also state
they are citing to HAMP and sections 2923.5 et seq., 2924 et seq., and 2934a et
seq., not to support a “private right of action, but as factual allegations and
prima facie proof of breaches of mandatory standard industry practices and
duties that violate federal/state regulations in support of each cause of
action.†(Underscoring omitted.)
Plaintiffs extensively
allege the history and purpose of HAMP, quoting some of its provisions. They plead “[s]ection 129†states the
Department of Treasury Guidelines issued under the Emergency Economic
Stabilization Act of 2008 “shall constitute standard industry practice.†(Boldface, italics & underscoring
omitted.) They also allege, without citation,
HAMP was set up “to standardize industry practices†as to modifications and
must be followed. (Boldface &
underscoring omitted.) They further
plead, again without identifying the source, that loan servicers must “consider
all eligible mortgage loans.†(Boldface &
underscoring omitted.)
The second amended
complaint alleged that to some extent defendant failed to follow required
procedures for foreclosing, in violation of sections 2924b, 2924f, 2924g,
2924.8, and 2934a. Citing the HAMP handbook
allege several HAMP violations by defendant.
These include a refusal to consider a HAMP modification, failure to
offer a Trial Period Plan (TPP) or send a denial letter, failure to acknowledge
receipt of and review the Initial Package plaintiffs provided, failure to
advise that the Initial Package was incomplete, failure to provide plaintiffs
with a single contact person, and failure to suspend the foreclosure sale and
to advise plaintiffs of same while the HAMP request was pending.
Plaintiffs also plead
that although they provided defendant with the Initial Package, defendant
continued to request updated documents for approximately a year thereafter. Plaintiffs complied with these requests. Even when those documents were submitted,
defendant failed to approve a TPP or issue a letter denying a HAMP
modification.
The specific allegations
as to each cause of action are set out in the discussion.
Plaintiffs’ alleged
damages include emotional distress and physical injury, requiring medical care
and medication.
Defendant filed a
demurrer to the second amended complaint. While it was pending, as plaintiffs
acknowledged in their opposition to the demurrer, defendant approved plaintiffs
for a TPP under HAMP and, when that was completed, offered plaintiffs a
permanent loan modification.
The court sustained the
demurrer without leave to amend, ruling that the claims were largely based on
alleged violations with HAMP, under which plaintiffs had no standing to
sue. Further, some claims were moot
because the loan modification had been offered to plaintiffs.
DISCUSSION
“When reviewing a
judgment dismissing a complaint after the granting of a demurrer without leave
to amend, courts must assume the truth of the complaint’s properly pleaded or
implied factual allegations. [Citation.]†(Schifando
v. City of Los
Angeles (2003) 31 Cal.4th 1074, 1081.) But we do not assume the truth of speculative
allegations (Rotolo v.
151 Cal.App.4th 307, 318) or “contentions, deductions or conclusions of law†(
2 Cal.4th 962, 967). “[W]e give the
complaint a reasonable interpretation, and read it in context. [Citation.]â€
(Schifando v. City of Los Angeles,
supra, 31 Cal.4th at p. 1081.) If
the demurrer can be sustained on any ground raised, we must affirm. (Ibid.) If the court sustains a demurrer without
leave to amend and a plaintiff seeks leave to amend, he or she must demonstrate
how the complaint could be amended to state a valid cause of action. (Ibid.)
Rosenthal Fair Debt Collection Practices Act
The Rosenthal Fair Debt
Collection Practices Act (§ 1788 et seq.; Rosenthal Act) was enacted, in
part, “to prohibit debt collectors from engaging in unfair or deceptive acts or
practices in the collection of consumer debts.â€
(§ 1788.1, subd. (b).) Those
unfair practices include threats, harassment, use of profanity, and “false simulation
of the judicial process.†(
690 F.Supp.2d 1141, 1151.)
Plaintiffs allege
defendant violated the Rosenthal Act by wrongfully threatening to foreclose on
their property, knowing it was a violation of foreclosure statutes and HAMP and
because it rescheduled the foreclosure sale multiple times while plaintiffs’
HAMP application to modify their loan was pending.
But foreclosing under a
trust deed is not debt collection under the Rosenthal Act. (Sipe
v. Countrywide Bank, supra, 690 F.Supp.2d at p. 1151; accord,
(E.D.Cal. July 3, 2013, No. 1:13-cv-00855-AWI-SMS) 2013 WL 3354448;
(C.D.Cal. June 21, 2013, No. SACV 13-00698-CJC (RNBx)) 2013 WL 3188854;
Mar. 29, 2013, No. 11-cv-928-W(MDD)) 2013 WL 1316682.) The Rosenthal Act applies to the collection
of consumer debts (§ 1788.2, subd. (b)), those owed resulting from a “consumer
credit transaction†(§ 1788.2, subd. (f)), i.e., where “property, services
or money is acquired on credit . . . primarily for personal, family, or
household purposes†(§ 1788.2, subd. (e)).
As plaintiffs cite, a
few federal district court cases have deviated from the general rule, but none dictates
a different result here. For example, the
complaint in Ansanelli v. JP Morgan Chase
Bank, N.A. (N.D.Cal. Mar. 28, 2011, No. C10-03892(WHA) 2011 WL 1134451 was
not based on claims under the Rosenthal Act.
In Herrera v. LCS Financial Services Corp. (N.D.Cal. Dec. 22, 2009,
No. C09-02843-TEH) 2009 WL 5062192 the creditor sent the plaintiff a demand
letter seeking payment on a second trust deed after the security had been
extinguished by a nonjudicial foreclosure by the first trust deed holder. In Walters
v. Fidelity Mortgage (E.D.Cal. 2010) 730 F.Supp.2d 1185, the court held the
defendant was a debt collector whose conduct went “beyond the scope of the
ordinary foreclosure process.†(
fees would be charged, which is a violation of section 1788.13, subdivision (e). This was sufficient to defeat the defendant’s
motion to dismiss her claim. (
F.Supp.2d at p. 1204.)
Servicing (E.D.Cal. 2010) 279 F.R.D. 575 confirmed foreclosing on property
that secures a debt is not covered by the Rosenthal Act. (Id.
at p. 582.) But the claim was allowed to
stand because the complaint did not mention foreclosure. (Ibid.)
In In re Bank of America HAMP Contract
Litigation (D.Mass. July 6, 2011, No. 10-md-02193-RWZ) 2011 WL 2637222 the
plaintiffs filed a putative class action and entered into a TPP with the
defendant, making reduced payments on their mortgages in exchange for a promise
of a permanent loan modification, which they did not receive. The defendants moved to dismiss the claim
under the Rosenthal Act, arguing foreclosure was not a debt collection nor were
they debt collectors. The court denied
the motion as premature, merely citing three cases it characterized as holding
mortgages on family residences were consumer debts. (Id.
at p. *6.) These included
F.Supp.2d 1185 and Ohlendorf v. American
Home Mortgage Servicing, supra, 279 F.R.D. 575, neither of which so held,
as described above.
The third case was
(N.D.Cal. Jan. 3, 2011, No. C-10-01667 JCS) 2011 WL 30759, where the plaintiffs
alleged the defendants urged them to enter into a six-month forbearance
agreement with reduced payments, promising to consider modification of their
loan, knowing plaintiffs would never be able to pay the modified loan
amount. The plaintiffs made the payments
but the defendants foreclosed on their home during the six-month period. In their cause of action for violation of the
Rosenthal Act, the plaintiffs alleged the defendants were debt collectors using
debt collection practices of false, misleading and deceptive statements in
their attempt to collect on the mortgage.
Reyes acknowledged that “the process of foreclosure is not
actionable as ‘debt collection’ under the Rosenthal Act.†(Reyes
v. Wells Fargo Bank, N.A., supra, 2011 WL 30759 at p. *20.) It noted, in a footnote, that it could not
state “categorically†collection on a mortgage could never give rise to a claim
under the Rosenthal Act but that analysis should depend on a defendant’s
alleged actions. (Id. at p. *19, fn. 8.) In
foreclosure but making alleged deceptive statements. (Id.
at p. *20.)
Finally, the recent
case, Corvello v. Wells Fargo Bank, N.A.
(9th Cir. 2013) 728 F.3d 878 weighed in on this question when considering if
the two consolidated cases should have been dismissed for failure to state a
claim. (Fed. Rules Civ.Proc., rule
12(b)(6); 28 U.S.C.) In
the defendant was required to offer the plaintiffs permanent loan modifications
after they complied with their TPP’s. The court ruled the pleading was sufficient to
state a claim on that basis. (
728 F.3d at p. 885.)
In Corvello the Rosenthal Act claim was a secondary issue. The court noted the defendant had
acknowledged it was a debt collector as defined in the Rosenthal Act. With no analysis, the court agreed with the
district court’s finding the defendant “was engaged in debt collection.†(Corvello
v. Wells Fargo Bank, N.A., supra, 728 F.3d at p. 885.) Relying on In re Bank of America HAMP Contract
Litigation, supra, 2011 WL 2637222 and Reyes
v. Wells Fargo Bank, N.A., supra, 2011 WL 30759, it determined the “TPP was
more than an informational circulation.â€
(Corvello v. Wells Fargo Bank, NA,
supra, 728 F.3d at p. 885.)
We are not necessarily
convinced by Reyes’s reasoning about
whether a foreclosure is a debt collection under the Rosenthal Act or
regarding the TPP, but even if we were, the allegations in the case before us
do not fall within the Rosenthal Act.
Here, the claim is that defendant postponed the foreclosure sale several
times while considering the HAMP application.
Postponing a sale is well within the ordinary scope of foreclosure as is
reporting derogatory information to a credit bureau. Plaintiffs’ allegation defendant continued to
make threats while the HAMP application was pending is not supported by the
exhibit to the second amended complaint on which they rely, which contains a
notice of foreclosure, a notice of trustee’s sale, and several news releases
prepared by plaintiffs claiming defendant was illegally foreclosing. Moreover, here the TPP was executed after the
alleged wrongful conduct.
In sum, none of the
cases nor the factual allegations on which plaintiffs rely support their Rosenthal
Act cause of action. There is no basis
on which this claim could be amended; therefore the demurrer was properly
sustained without leave to amend.
Intentional and Negligent Misrepresentation
Plaintiffs allege claims
for intentional and negligent misrepresentation. An intentional fraud cause of action must plead
a misrepresentation made with knowledge of its falsity and with intent to
defraud, justifiable reliance, and resulting damage. (Robinson
Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990.) “‘The elements of negligent misrepresentation
are “(1) the misrepresentation of a past or existing material fact, (2) without
reasonable ground for believing it to be true, (3) with intent to induce
another’s reliance on the fact misrepresented, (4) justifiable reliance on the
misrepresentation, and (5) resulting damage.â€â€™
[Citation.]†(
Solutions, Inc. (2011) 196 Cal.App.4th 1559, 1573.)
In the intentional
misrepresentation cause of action plaintiffs allege defendant falsely
represented it would consider a loan modification but did not intend to do
so. They make virtually the same
allegation in the negligent misrepresentation cause of action. But plaintiffs affirmatively represented in
their opposition to the demurrer that defendant offered them a loan
modification. They argued this was evidence
defendant admitted they were qualified for a HAMP modification, which modification
should have occurred two years earlier.
But this actually defeats their allegation of intent to defraud. The trial court relied on this representation
in making its ruling, without objection by plaintiffs. Plaintiffs do not raise this as an issue in
their opening brief and they filed no reply brief, thus failing to respond to
defendant’s reliance on this representation in its brief.
We treat the affirmative
representation defendant offered plaintiffs a TPP and permanent loan
modification as pleaded. (See
(2012) 203 Cal.App.4th 1215, 1221, fn. 2 [in addition to allegations in
complaint, “‘we may consider other relevant matters of which the trial court
could have taken judicial notice and we may treat such matters as having been
pleaded’â€]; see also Del E. Webb Corp. v.
Structural Materials Co. (1981) 123 Cal.App.3d 593, 604-605 [under doctrine
of truthful pleading, in deciding demurrer court may consider declarations
filed on the plaintiff’s behalf and the plaintiff’s responses to requests for
admissions and sustain demurrer when these conflict with allegations in
facially valid complaint]; Hoffman v.
Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400 [“Under the
doctrine of truthful pleading, the courts ‘will not close their eyes to
situations where a complaint contains allegations of fact inconsistent with
attached documents, or allegations contrary to facts that are judicially
noticed’â€].)
Plaintiffs relied on the
representation of the offer of the TPP and permanent loan modification in
support of their demurrer. It would be
inequitable for us to ignore it in ruling on the demurrer. The representation defeats an essential
element of both intentional and negligent misrepresentation. Again, there is no basis to amend because
plaintiffs cannot plead around a fact they have admitted. (See Berg
& Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034 [in
amended complaint the plaintiff may not omit detrimental allegation from prior
complaint].)
Negligence Claims
Plaintiffs raised claims
of both negligence and negligent infliction of emotional distress. To state a negligence cause of action a
plaintiff must allege the defendant owed the plaintiff a duty of care,
defendant’s breach of that duty, and the breach proximately caused the
plaintiff’s damages. (
Cal.App.4th 654, 662.) “[A]bsent a duty,
the defendant’s care, or lack of care, is irrelevant.†(Software
Design & Application, Ltd. v. Hoefer & Arnett, Inc. (1996) 49
Cal.App.4th 472, 482.) Negligent
infliction of emotional distress is not an independent tort; it is the tort of
negligence and has the same elements. (
6 Cal.4th 965, 984.)
Plaintiffs allege
defendant owed them a duty of care and “‘reasonable efforts’†under HAMP,
including a duty to consider any loan eligible for modification. They also plead defendant had a duty to
strictly comply with certain provisions of the Making Home Affordable Handbook
in connection with the request for a loan modification under HAMP, as well as
sections 2924 et seq., 2923.5 et seq., and 2934a et seq., in servicing and
foreclosing on loans.
A lender does not owe a
borrower a duty of care when the relationship is merely that of lender and
borrower. (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 898.) The same rule applies to loan servicers. (Somera
v. IndyMac Federal Bank, FSB (E.D.Cal. Mar. 3, 2010, No. 2:09-cv-01947-FCD-DAD)
2010 WL 761221, p. *5.)
Plaintiffs cite
supra, 2011 WL 1134451 in support of their argument. In Ansanselli
the court found the defendant went beyond its traditional role as a lender when
it guaranteed it would modify the loan if the plaintiff timely made all the
payments due under a TPP. (
Instead, we agree with the
majority of cases that hold loan modifications do not create a relationship
beyond that of lender and borrower. In
(E.D.Cal. July 17, 2013, No. 2:13-00976 WBS EFB) 2013 WL 3773950, for example,
the plaintiff sued the defendant loan servicer for negligence, among other
claims, based on facts strikingly similar to those in the case before us. He alleged the defendant told him to submit
applications to modify his loan, but repeatedly asked for the same documents
and then denied a modification without reviewing the application and without
explaining the basis for the refusal.
The defendant also failed to then discuss other ways to avoid
foreclosure but instead began the foreclosure process.
The court held the
defendant owed no duty because all of the defendant’s alleged wrongful acts
concerned its review of the application to modify the plaintiff’s loan. This did not go beyond a traditional
lender-borrower relationship. (
Oct. 3, 2012, No. 5:11-cv-05664 EJD) 2012 WL 4747165, p. *4 [loan modification “is
nothing more than a renegotiation of loan termsâ€]; see also
(C.D.Cal. Sept. 20, 2012, SACV 12-0524-DOC-JPRx) 2012 WL 4475330, p. *6;
(S.D.Cal. July 29, 2011, No. 11-CV-0998-H (BLM) 2011 WL 3241850, p. *4.)
Further,
even if the reasoning in Ansanselli
was correct, the case is distinguishable because here the claims do not arise
out of any negligence in connection with the TPP.
Nor do violations of
sections 2924 through 2924k give rise to a negligence cause of action. (Residential
Capital v. Cal-Western Reconveyance Corp. (2003) 108 Cal.App.4th 807, 827
[Legislature enacted “comprehensive statutory scheme†of conduct of nonjudicial
foreclosures; courts should not “graft[] a tort remedy†for violation of
statute]; see also Moeller v. Lien (1994)
25 Cal.App.4th 822, 834 [“The comprehensive statutory framework established to
govern nonjudicial foreclosure sales[, including] a myriad of rules relating to
notice†“is intended to be exhaustive. . . . It would
be inconsistent . . . to incorporate another unrelated cure
provision into statutory nonjudicial foreclosure proceedingsâ€].)
As to section 2923.5,
the only remedy for violation is postponement of the foreclosure sale; a
negligence claim does not lie. (
208, 223-224.)
The
second amended complaint alleges defendant breached its duty to record a valid
substitution of trustee as required by section 2934a. Plaintiffs plead they sustained general and
special damages and also seek punitive damages as a result. They claim they have “been left financially
devastated,†have sustained damage to their credit, were unable to work and
lost income, and suffered physical and emotional harm. But they have not specifically alleged how
failure to record a valid substitution of trustee harmed them. (See Fontenot
v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272 [in suit for
wrongful foreclosure the plaintiff must “demonstrate the alleged imperfection
in the foreclosure process was
prejudicial . . . . Prejudice is not presumed from
‘mere irregularities’ in the processâ€].)
Moreover, any damage suffered would have been de minimis and not
actionable or recoverable. (
Cal.App.3d 449, 458.)
Because plaintiffs have
not alleged a duty, neither cause of action is adequate. Given that this was plaintiffs’ third attempt
to plead these claims and they have not suggested how they could cure the cause
of action, leave to amend was properly denied.
Intentional Infliction of Emotional Distress
The elements of a cause
of action for intentional infliction of emotional distress are a defendant’s
outrageous conduct with the intent to cause, or a reckless disregard of the
likelihood of causing, emotional distress; and the defendant’s actual and
proximate cause of severe emotional distress suffered by the plaintiff. (Johnson
v. Ralphs Grocery Co. (2012) 204 Cal.App.4th 1097, 1108.) To be considered outrageous, “‘“[c]onduct . . . must
be so extreme as to exceed all bounds of that usually tolerated in a civilized
society.â€â€™ [Citations.]†(Ibid.) “The California Supreme Court has set a ‘high
bar’ for what can constitute severe distress. [Citation.]
‘Severe emotional distress means “‘emotional distress of such
substantial quality or enduring quality that no reasonable [person] in
civilized society should be expected to endure it.’†[Citations.]’ [Citations.]â€
(Wong v. Jing (2010) 189
Cal.App.4th 1354, 1376.)
The alleged outrageous
conduct was defendant’s violation of federal and state statutes by continuing
to threaten to foreclose during the pendency of an application to modify plaintiffs’
loan under HAMP and its refusal to consider the application. Plaintiffs conclusorily plead the conduct was “outrageous,
extreme, fraudulent, deceptive, unfair†and violated federal and common
law. In their brief plaintiffs do not
expand upon the second amended complaint’s allegations, but merely state
defendant’s conduct was not privileged and was “outside the normally required
conduct within the foreclosure scheme†(italics omitted), beyond “‘all
reasonable bounds of decency’ and may rise to the level of outrageous conduct.â€
The cause of action is insufficient.
In Coleman v. Republic Indemnity Ins. Co. (2005) 132 Cal.App.4th 403
the plaintiffs alleged the defendant had advised a claimant not to hire a
lawyer and misrepresented the statute of limitations within which to file a
claim, both statutory violations. The
court ruled this was not a sufficient allegation to support a cause of action
for intentional infliction of emotional distress. (Id.
at p. 417.) In so doing, it cited a line
of California cases that hold neither delay nor outright denial of insurance
claims is outrageous enough to support an intentional infliction of emotional
distress cause of action. (
Similarly a delay in
considering a loan modification while continuing to maintain a foreclosure
proceeding does not support the cause of action. (See Lesley v. Ocwen Financial
Corp. (C.D.Cal. Mar. 13, 2013, No. SA CV 12-1737-DOC (JPRx)) 2013 WL
990668, p. *11 [the defendant’s denial of HAMP modification because death of
the plaintiffs’ son was not considered a hardship, insufficient to support
intentional infliction of emotional distress cause of action];
(E.D.Cal. Nov. 30, 2012, No. 2:10-cv-02799 LKK KJN PS ) 2012 WL 6005759, p. *16
[intentional infliction of emotional distress cause of action insufficient
based on the defendant’s alleged failure to “quickly†grant loan modification
under HAMP after representing to the plaintiff it would do so if he complied
with certain requirements]; see also In
re Jenkins (Bankr. E.D.Tenn. 2013) 488 B.R. 601, 617 [lender’s institution
of foreclosure during consideration of HAMP modification request and while TPP
in place not so extreme as to support intentional infliction of emotional
distress cause of action under Tennessee law].)
The conduct in all of these
cases essentially mirrors that on which plaintiffs rely, i.e., statutory
violations when defendant continued the foreclosure action while it delayed
considering plaintiffs’ request for a HAMP loan modification. This does not measure up to the “high barâ€
required to plead a cause of action for intentional infliction of emotional
distress, even taken with the allegation defendant knew plaintiffs were senior
citizens. Plaintiffs have not suggested
any allegations they could add were we to give leave to amend.
Breach of Contract and the Implied Covenant of Good Faith and Fair Dealing
allege that when they sought a loan modification from defendant, its
representatives “orally promised†them that if they provided the Initial
Package, defendant would consider a modification under HAMP. Defendant breached by “failing to comply with
HAMP standard industry practices†by “ignoring†plaintiffs’ application for
modification and failing to “make a ‘reasonable effort’ to†offer a TPP to
plaintiffs within 30 days of receiving the Initial Package or send a denial
letter, but instead continuing to ask for additional documents, including some
plaintiffs had already provided. Defendant
also “repudiated the contract†when it denied the modification because, after
review of the request under the HAMP guidelines, it determined plaintiffs did
not qualify.
title="">[5] Plaintiffs allege this was a “positive[]
indicat[ion]†defendant would repudiate its contract.
Plaintiffs maintain that
due to defendant’s breach they did not receive the benefit of their bargain and
were damaged by the threat of foreclosure and a cloud on their title, among
other things.
The elements of a breach
of contract cause of action are: (1) the
existence of a contract; (2) plaintiffs’ performance or excuse of performance
of their duties under the contract; (3) defendant’s breach; and (4) plaintiffs’
damages. (First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731,
745.) A valid contract requires, among
other things, valuable consideration. (
(2005) 133 Cal.App.4th 1257, 1269.)
Further there is a duty
of good faith and fair dealing implied in every contract that a party will not
perform any acts that will interfere with the other party’s right to receive
the benefits under the contract. (
(2012) 208 Cal.App.4th 1001, 1014.) A
cause of action for breach of that covenant requires the same allegations as a
breach of contract claim except it must plead both an implied promise and
defendant’s unfair interference with plaintiffs’ right to receive the fruits of
the contract. (Yari v. Producers Guild of America (2008) 161 Cal.App.4th 172,
182.)
Plaintiffs’ causes of
action have several deficiencies. But we
need not discuss most of them. As
plaintiffs acknowledge, they did receive the benefit of the bargain. Despite an alleged threat of foreclosure and
a cloud on their title, their loan was permanently modified. Thus, no sufficient breach is alleged and neither
cause of action can stand. Again,
plaintiffs have not advised of, and we have not found, any basis to amend the
causes of action and the court’s order sustaining them without leave to amend
must stand.
Promissory Estoppel
The second amended
complaint alleges defendant “made clear, definite and certain promises to
[p]laintiffs to induce them to enter into oral executed
agreements . . . .†Specifically, defendant promised to evaluate
plaintiffs in good faith for the possibility of a loan modification under HAMP
if plaintiffs provided the Initial Package, hold off on the foreclosure sale
during the evaluation, and not conduct a foreclosure sale at all. Due to these false promises, plaintiffs failed
to “take legal action against†defendant and suffered damages and personal
injury. Plaintiffs allege failure to
enforce the promises would result in injustice.
The elements of a
promissory estoppel claim are a clear and unambiguous promise, reasonable and
foreseeable reliance by the promisee, and injury to the promisee. (Wells
Fargo Bank, N.A. v. FSI Financial Solutions, Inc., supra, 196 Cal.App.4th at
p. 1573.) “‘Estoppel cannot be
established from . . . preliminary discussions and
negotiations.’ [Citation.]†(Garcia
v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1044.)
This cause of action has
several problems. But, as with the
breach of contract cause of action, and as plaintiffs acknowledge, defendant
did evaluate their application and offered them a TPP and ultimately a
permanent loan modification.
Thus, this cause of
action is also insufficient. Plaintiffs
have not shown how they could amend to cure these deficiencies, nor can we see
a solution. In addition, plaintiffs have
had three chances to sufficiently allege this claim and have been unable to do
so. The demurrer as to this claim was properly
sustained without leave to amend.
Unfair Business Practices
The UCL prohibits an “unlawful,
unfair or fraudulent business practice.â€
Plaintiffs plead defendant’s violation of HAMP and state statutes are
actionable under that statutory scheme.
The only remedies
available to private plaintiffs under the UCL are injunctive relief and
restitution. (Zhang v. Superior Court (2013) 57 Cal.4th 364.) Neither damages nor attorney fees are
recoverable. (Id. at p. 371.) “‘Restitution
under [Business and Professions Code] section 17203 is confined to restoration
of any interest in “money or property, real or personal, which may have been
competition.†. . . A restitution order against a
defendant thus requires both that money or property have been lost by a
plaintiff, on the one hand, and that it have been acquired by a defendant on
the other.’ [Citation.]†(Ibid.)
Plaintiffs have not pleaded
any facts showing they are entitled to restitution. There are no allegations in the second
amended complaint showing they have lost any money or property that defendant
then acquired. In their brief they
merely state defendant’s “conduct caused [them] injury and damages.â€
As to injunctive relief,
plaintiffs allege they are entitled to it but it is unclear as to what they are
seeking to enjoin, other than perhaps “any prospective wrongful foreclosure.†Given that their loan has been permanently
modified, any possible foreclosure would not be based on plaintiffs’ prior
default. Thus, there is no ground for
injunctive relief based on the events alleged in the second amended complaint. This precludes any possibility of amending it.
of Foreclosure Documents, Quiet Title, and Slander of Title
a. Cancellation of Foreclosure Documents
and Enjoining Foreclosure Sale and Quiet Title
Mixed within several
pages of legal argument, all of which we disregard as improper, plaintiffs
allege defendant violated sections 2923, 2923.5, 2924, 2924b, 2924f, 2924g, and
2934 because it failed to: (1) contact
plaintiffs to discuss options to avoid foreclosure and then wait 30 days before
it recorded a notice of default; (2) timely mail the required number of copies of
the notice of default to plaintiffs; (3) post the notice of default; (4) mail
and post a notice to the resident of the property; (5) conduct the foreclosure sale
within one year from the date stated in the notice of sale; and (6) ensure
Quality had the proper authority to act as trustee and record a valid
substation of trustee. Plaintiffs plead
there can be no valid foreclosure sale as a result of these violations and ask
the court to cancel the foreclosure notices and enjoin sale.
Both of these causes of
action are moot because plaintiffs’ loan has been permanently modified,
foreclosure is not pending, and defendant is not disputing title.
Slander of Title
Plaintiffs make no
argument as to this cause of action and thus they have waived their claim. (Evans
v. CenterStone Development Co. (2005) 134 Cal.App.4th 151, 165 [failure to
make reasoned argument forfeits the issue].)
Miscellaneous
To the extent plaintiffs
raise any other issues not clearly set out in headings and supported by
reasoned legal argument, they are forfeited.
(Benach v. County of Los Angeles
(2007) 149 Cal.App.4th 836, 852.)
DISPOSITION
The judgment is affirmed. Defendant is entitled to costs on
appeal.
THOMPSON,
J.
WE CONCUR:
RYLAARSDAM,
ACTING P. J.
MOORE, J.
name="_ftn1" title=""> [1] HAMP was created by the United States
Department of the Treasury and associated federal agencies under the authority
of the Emergency Economic Stabilization Act (12 U.S.C. § 5201 et seq.).
name="_ftn2" title=""> [2] Although other parties are named we refer
only to defendant.
